Exhibit 10.16


 


AMENDED AND RESTATED SECURITY AGREEMENT


(LEASE NO. 3)


 


THIS AMENDED AND RESTATED SECURITY AGREEMENT (this “Agreement”)
is entered into as of the 30th day of June, 2008 by and among FIVE STAR QUALITY CARE TRUST, a Maryland
business trust (“Tenant”), and SNH
SOMERFORD PROPERTIES TRUST, a Maryland real estate investment trust, SPTIHS PROPERTIES TRUST, a Maryland real
estate investment trust and SPTMNR PROPERTIES
TRUST, a Maryland real estate investment trust  (together with their successors and assigns,
collectively, the “Secured Parties”).


 


W  I  T  N  E  S
S  E  T  H:


 


WHEREAS, the Secured
Parties and Tenant are parties to that certain Second Amended and Restated
Lease Agreement, dated as of November 19, 2004, as the same has been
amended to date (as so amended, the “Original Lease”); and


 


WHEREAS, in connection
with the Original Lease, Tenant and the Secured Parties are parties to that
certain Security Agreement, dated as of December 31, 2001 and that certain
Security Agreement, dated as of October 25, 2002, as each has been
confirmed from time to time (as so confirmed, the “Original Security
Agreements”), pursuant to which Tenant granted to the Secured Parties a
first and perfected lien and security interest in certain collateral related to
the properties demised under the Original Lease; and


 


WHEREAS, as of the
date hereof, the Secured Parties and Tenant are amending, restating and
bifurcating the Original Lease into two separate leases, one of which shall be
named the Amended and Restated Master Lease Agreement (Lease No. 3), (the “Amended
Lease No. 3”); and


 


WHEREAS, pursuant to  the Amended Lease No. 3, Tenant is
required to grant to the Secured Parties a first and perfected lien and
security interest in certain collateral related to the properties demised under
the Amended Lease No. 3; and


 


WHEREAS, in connection
with the foregoing, Tenant and the Secured Parties wish to amend and restate
the Original Security Agreements into two separate security agreements, one of
which shall act as security for the payment and performance of the


 

















 


Obligations (as hereinafter defined), all subject to
and upon the terms and conditions herein set forth; and


 


NOW, THEREFORE, in consideration of the mutual covenants
herein contained and other good and valuable consideration, the mutual receipt
and legal sufficiency of which are hereby acknowledged, Tenant and the Secured
Parties hereby agree that the Original Security Agreements are hereby amended
and restated, effective as of the date hereof, to read as follows:


 


Section 1.    Definitions.  As used in this Agreement, the following
terms shall have the meanings specified below. 
Except as otherwise defined, terms defined in the Uniform Commercial
Code and used herein without definition shall have the meanings given such terms
in the Uniform Commercial Code.


 


“Affiliated Person”
shall have the meaning given such term in the Amended Lease No. 3.


 


“Amended Lease No. 3” shall have the meaning
given such term in the recitals to this Agreement.


 


“Business Day”
shall have the meaning given such term in the Amended Lease No. 3.


 


“Collateral” shall mean all of Tenant’s
right, title and interest in and under or arising out of all and any personal
property, intangibles and fixtures of any type or description (other than
Excluded Collateral), wherever located and now existing or hereafter arising,
or which constitute or arise from the operation, maintenance or repair of the
Leased Property or any portion thereof, together with any and all additions and
accessions thereto and replacements, products, proceeds (including, without
limitation, proceeds of insurance) and supporting obligations thereof,
including, but not limited to, the following:


 


(a)                            all
goods, including, without limitation, all Equipment; and


 


(b)                                 all
General Intangibles; and


 


(c)                                  all
other personal property or fixtures of any nature whatsoever which relate to
the operation, maintenance or repair of the Leased Property, or any portion
thereof, and all property from time to time described in any financing
statement signed by Tenant naming the Secured Parties as secured parties; and


 


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(d)                                 all
claims, rights, powers or privileges and remedies relating to the foregoing or
arising in connection therewith, including, without limitation, all Licenses
and Permits which Tenant legally may grant a security interest in, rights to
make determinations, to exercise any election (including, but not limited to,
election of remedies) or option or to give or receive any notice, consent, waiver
or approval; all liens, security, guaranties, endorsements, warranties and
indemnities and all insurance, eminent domain and condemnation awards and
claims therefor relating thereto or arising in connection therewith; all rights
to property forming the subject matter of any of the foregoing, including,
without limitation, rights to stoppage in transit and rights to returned
or repossessed property; all writings relating to the foregoing or arising in
connection therewith; and


 


(e)                                  all
contract rights, general intangibles and other property rights of any nature
whatsoever arising out of or in connection with any of the foregoing (other
than Excluded Collateral), including, without limitation, payments due or to
become due, whether as repayments, reimbursements, contractual obligations,
indemnities, damages or otherwise.


 


“Equipment” shall mean all buildings,
structures, improvements, fixtures and items of machinery, equipment and other
tangible personal property which constitute, arise from or relate to the operation,
maintenance or repair of the Leased Property or any portion thereof, together
with all repairs, replacements, improvements, substitutions, extensions or
renewals thereof or additions thereto, all parts, additions and accessories
incorporated therein or affixed thereto, and all “equipment” as such term is
defined in the Uniform Commercial Code, and all cash and non-cash proceeds
therefrom.


 


“Event of Default” shall
have the meaning given such term in Section 6.


 


“Excluded Collateral”
shall mean (a) all Accounts of Tenant,
(b) all Deposit Accounts and Securities Accounts of Tenant, (c) all
Chattel Paper of Tenant, (d) all General Intangibles relating to such
Accounts or Chattel Paper, (e) all Support Obligations relating to any of
the foregoing, (f) all Instruments or Investment Property evidencing or
arising from any Accounts or Chattel Paper, (g) all documents, books,
records or other information pertaining to any of the foregoing 


 


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(including, without limitation, customer
lists, credit files, computer programs, printouts, tapes, discs, punch cards,
data processing software and other computer materials and records and related
property and rights), (h) all accessions to, substitutions for, and all replacements, products
and proceeds of the foregoing (including without limitation, proceeds of
insurance policies insuring any of the foregoing) and (i) any of the
sublease agreements relating to the Leased Property under which Tenant is a
party.


 


“Facilities”
shall have the meaning given such term in the Amended Lease No. 3.


 


“General Intangibles” shall mean all present and
future general intangibles and contract rights (other than Excluded Collateral)
which constitute, arise from or relate to the operation, maintenance or repair
of the Leased Property, or any portion thereof, including, but not limited to,
all causes of action, corporate or business records, inventions, designs,
patents, patent applications, trademarks, trademark registrations and applications
therefor, goodwill, trade names, trade secrets, trade processes, copyrights,
copyright registrations and applications therefor, franchises, customer lists,
computer programs, claims under guaranties, tax refund claims, rights and
claims against carriers and shippers, leases, claims under insurance policies,
all rights to indemnification and all other intangible personal property of
every kind and nature which constitutes, arises from or relates to the
operation, maintenance or repair of the Leased Property, or any portion
thereof.


 


“Instrument” shall have the meaning give
such term in Article 9 of the Uniform Commercial Code.


 


“Leased Property”
shall have the meaning given such term in the Amended Lease No. 3.


 


“Licenses” shall mean all certificates of need (if
any), licenses, permits, rights of use, covenants or rights otherwise
benefiting or permitting the use and operation of each applicable Property or
any part thereof pertaining to the operation, maintenance or repair of such
Property or any portion thereof.


 


“Obligations” shall
mean each and every obligation and liability of Tenant to the Secured Parties,
whether existing as of the date hereof or hereafter arising, under the Original
Lease or the Amended Lease No. 3 or any other document or 


 


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agreement executed and
delivered pursuant thereto, including, without limitation, the payment of the
rent and the payment and performance of each and every other obligation of
Tenant to the Secured Parties, whether existing as of the date hereof or
hereafter arising, whether direct or indirect, absolute or contingent, due or
to become due under the Original Lease or the Amended Lease No. 3.


 


“Original Lease”
shall have the meaning given such term in the recitals to this Agreement.


 


“Original Security
Agreements” shall have the meaning given such term in the
recitals to this Agreement.


 


“Overdue Rate”
shall have the meaning given to such term in the Amended Lease No. 3.


 


“Permits” shall mean all permits, approvals, consents,
waivers, exemptions, variances, franchises, orders, authorizations, rights and
licenses obtained or hereafter obtained from any federal, state or other
governmental authority or agency relating to the operation, maintenance or
repair, of each applicable Property, or any portion thereof.


 


“Person” shall
have the meaning given such term in the Amended Lease No. 3.


 


“Property”
shall have the meaning given such term in the Amended Lease No. 3.


 


“Rent” shall
have the meaning given such term in the Amended Lease No. 3.


 


“Secured Parties” shall have the meaning given such term in the
preamble to this Agreement.


 


“Tenant” shall have the meaning
given such term in the preamble to this Agreement.


 


“Uniform Commercial Code” means
Article 9 of the Uniform Commercial Code as in effect in the Commonwealth
of Massachusetts from time to time.


 


Section 2.    Security Interest.  As security for the prompt payment and
performance of all the Obligations, Tenant hereby grants, pledges, transfers
and assigns to the Secured Parties, their successors and assigns and all other
holders from time to time of the Obligations, a continuing security interest
under the Uniform Commercial Code from time to time in effect in the 


 


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jurisdiction in which any of
the Collateral is located in and a continuing lien upon all of Tenant’s right,
title and interest in the Collateral, together with any and all additions
thereto and replacements, products and proceeds thereof, whether now existing
or hereafter arising or acquired and wherever located.


 


Section 3.    General
Representations, Warranties and  Covenants.  Tenant represents, warrants and covenants,
which representations, warranties and covenants shall survive execution and
delivery of this Agreement, as follows:


 


(a)           Each of the warranties and
representations of Tenant contained herein, in the Amended Lease No. 3 or
in any other document executed in connection herewith or therewith are true and
correct on the date hereof.


 


(b)           Except for the lien granted to the
Secured Parties pursuant to this Agreement and any liens permitted under the
Amended Lease No. 3, Tenant is, and as to the Collateral acquired from
time to time after the date hereof Tenant will be, the owner of all the
Collateral free from any lien, security interest, encumbrance or other right,
title or interest of any Person, except for the security interest of the
Secured Parties therein, and Tenant shall defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any interest
therein adverse to the Secured Parties. 
The lien granted in this Agreement by Tenant to the Secured Parties in
the Collateral is not prohibited by and does not constitute a default under any
agreements or other instruments constituting a part of the Collateral, and no
consent is required of any Person to effect such lien which has not been
obtained.


 


(c)           Except as permitted under the Amended
Lease No. 3, there is no financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) now on file or
registered in any public office covering any interest of any kind in the
Collateral, or intended so to be, which has not been terminated, and so long as
this Agreement remains in effect or any of the Obligations or any obligations
of any Affiliated Person of Tenant to the Secured Parties remain unpaid, Tenant
will not execute and there will not be on file in any public office any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) or 
statements relating to the Collateral, except financing statements filed
or to be filed in respect of and covering the security interest of the Secured
Parties.


 


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(d)           The chief executive office and the
principal place of business of Tenant are as set forth in Schedule 1 and
Tenant will not move its chief executive office or establish any other
principal place of business except to such new location as Tenant may establish
in accordance with this Section 3(d). The location of each Facility
comprising a portion of the Leased Property is as set forth in Schedule 2.  The originals of all documents evidencing
Collateral and the only original books of account and records of Tenant
relating thereto are, and will continue to be, kept at such chief executive
office or the applicable Facility, as the case may be, or at such new location
as Tenant may establish in accordance with this Section 3(d).  Tenant shall not move its chief executive
office or establish any other principal place of business until (i) Tenant
shall have given to the Secured Parties not less than ten (10) days’ prior
written notice of its intention to do so, which notice shall clearly describe
such new location and provide such other information in connection therewith as
the Secured Parties may reasonably request, and (ii) with respect to such
new location, Tenant shall have taken such action, satisfactory to the Secured
Parties (including, without limitation, all action required by Section 5),
to maintain the security interest of the Secured Parties in the Collateral.


 


(e)           All tangible personal property owned
on the date hereof by Tenant to be used in connection with the operation or
maintenance of the Leased Property, or any portion thereof, is located at each
applicable Property or is in transit to such Property from the vendor
thereof.  Tenant agrees that (i) all
such property held by Tenant on the date hereof, once at each applicable
Property, shall remain at such Property and (ii) all such property
subsequently acquired by Tenant shall immediately upon acquisition be
transferred to and remain at the applicable Property.


 


(f)            The corporate name and
organizational identification number of Tenant is set forth on the signature page hereto.  The name under which each of the Facilities
is operated is set forth on Schedule 2. 
Tenant shall not (i) change such name without providing the Secured
Parties with thirty (30) days’ prior written notice and making all filings and
taking all such other actions as the Secured Parties determines are necessary
or appropriate to continue or perfect the security interest granted hereunder, (ii) change
its corporate organizational number, nor (iii) conduct its business in any
other name or take title to any Collateral in any other name while this
Agreement remains in effect.  Except as
otherwise set forth on Schedule 1, Tenant has not ever had any 


 


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other name nor conducted business in any other name in any
jurisdiction.  Tenant is organized as a
Maryland business trust.  Subject to the
terms and conditions of the Amended Lease No. 3, Tenant shall not change
its organizational structure or jurisdiction of organization without giving at
least thirty (30) days’ prior written notice thereof to the Secured Parties.


 


(g)           The Secured Parties are authorized
(but are under no obligation) to make, upon ten (10) Business Days’ notice
to Tenant (except in the case of exigent circumstances, in which circumstances
upon such notice, if any, as may then be reasonably practical), any payments
which in the Secured Parties’ opinion are necessary to:


 


(i)                                     discharge
any liens which have or may take priority over the lien hereof; and


 


(ii)                                  pay
all premiums payable on the insurance policies referred to in the Amended Lease
No. 3 or any other document or agreement executed in connection therewith
or herewith, upon the failure of Tenant to make such payments within the time
permitted therein.


 


Tenant shall have no claim against the Secured
Parties by reason of its decision not to make any payments or perform such
obligations permitted under this Section 3(g).  Tenant shall repay to the Secured Parties any
sums paid by the Secured Parties upon demand. 
Any sums paid and expenses incurred by the Secured Parties pursuant to
this paragraph shall bear interest at the Overdue Rate.


 


(h)           If any of the Collateral at any time
becomes evidenced by an Instrument, Tenant shall promptly deliver such
Instrument to the Secured Parties, appropriately endorsed to the order of the
Secured Parties, to be held pursuant to this Agreement.


 


(i)            Tenant shall not sell, transfer,
change the registration, if any, of, dispose of, attempt to dispose of, or
substantially modify or abandon the Collateral or any material part thereof,
other than as permitted under the Amended Lease No. 3, without the prior
written consent of the Secured Parties. 
Except as permitted under the Amended Lease No. 3, Tenant shall not
create, incur, assume or suffer to exist any lien upon any of the Collateral
without the prior written consent of the Secured Parties.


 


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(j)            Tenant shall not assert against the
Secured Parties any claim or defense which Tenant may have against any seller
of the Collateral or any part thereof or against any Person with respect to the
Collateral or any part thereof.


 


(k)           Tenant shall, upon demand, pay to the
Secured Parties the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents,
which the Secured Parties may incur in connection with (i) the
administration of this Agreement, (ii) the custody or  preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise
or enforcement of any of the rights of the Secured Parties hereunder and under
such other agreements or (iv) the failure by Tenant to perform or observe
any of the provisions hereof.


 


(l)            Tenant shall indemnify and hold
harmless the Secured Parties from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Secured Parties in any way
relating to or arising out of this Agreement or arising out of Tenant’s
obligations under any other documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or the enforcement
of any of the terms hereof or of any such other documents.


 


Section 4.     Special
Provisions Concerning Equipment.  Tenant shall not impair the rights of the
Secured Parties in the Equipment. 
Regardless of the manner of the affixation of any Equipment to real
property, the Equipment so attached shall at all times constitute and remain
personal property.  Tenant retains all
liability and responsibility in connection with the Equipment and the liability
of Tenant to pay the Obligations shall in no way be affected or diminished by
reason of the fact that such Equipment may be lost, destroyed, stolen or
damaged or for any reason whatsoever have become unavailable to Tenant.  Upon the request of the Secured Parties,
Tenant shall provide to the Secured Parties a current list of Equipment.


 


Section 5.     Financing Statements;
Documentary Stamp Taxes.


 


(a)           Tenant shall, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Secured Parties
from time to time such lists, descriptions and designations of inventory,
warehouse receipts, bills of lading, documents of 


 


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title, vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to the Collateral and other property or rights covered by the
security interest hereby granted, which the Secured Parties reasonably deem
appropriate or advisable to perfect, preserve or protect their security
interest in the Collateral.  Tenant
authorizes the Secured Parties to file any such financing statements without the
signature of Tenant and Tenant will pay all applicable filing fees and related
expenses.  To the extent permitted by
law, a carbon, photographic or other reproduction of this Agreement or a
financing statement shall be sufficient as a financing statement.


 


(b)           Tenant shall procure, pay for, affix
to any and all documents and cancel any documentary tax stamps required by and
in accordance with, applicable law, and Tenant shall indemnify and hold
harmless the Secured Parties from and against any liability  (including interest and penalties) in respect
of such documentary stamp taxes.


 


Section 6.    Event of Default.  For purposes of this Agreement, the term “Event
of Default” shall mean (a) the occurrence of an Event of Default under
the Amended Lease No. 3 or any document or agreement executed in
connection therewith; (b) the failure of Tenant to comply with any of its
covenants or obligations under this Agreement and the continuance thereof for a
period of ten (10) Business Days after written notice thereof; (c) any
representation or warranty contained herein or made by Tenant in connection
herewith shall prove to have been false or misleading in any material respect
when made; or (d) the occurrence of any default or event of default under
any document, instrument or agreement evidencing the Obligations.


 


Section 7.    Remedies.


 


(a)           Upon the occurrence and during the
continuance of an Event of Default, in addition to any rights and remedies now
or hereafter granted under applicable law, under the Amended Lease No. 3
or under any other documents or agreements entered into in connection herewith
or therewith, and not by way of limitation of any such rights and remedies, the
Secured Parties shall have all of the rights and remedies of a secured party
under the Uniform Commercial Code as enacted in any applicable jurisdiction,
and the right, without notice to, or assent by, Tenant, in the name of Tenant
or in the name of the Secured Parties or otherwise:


 


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(i)                                               with respect to
the General Intangibles to ask for, demand, collect, receive, compound and give
acquittance therefor or any part thereof, to extend the time of payment of,
compromise or settle for cash, credit or otherwise, and upon any terms and conditions,
any thereof, to exercise and enforce any rights and remedies in respect
thereof, and to file any claims, commence, maintain or discontinue any actions,
suits or other proceedings deemed by the Secured Parties necessary or advisable
for the purpose of collecting or enforcing payment and performance thereof;


 


(ii)                                            to take
possession of any or all of the Collateral and to use, hold, store, operate,
merge and/or control the same and to exclude Tenant and all Persons claiming
under it wholly or partly therefrom, and, for that purpose, to enter, with the
aid and assistance of any Person or Persons and with or without legal process,
any premises where the Collateral, or any part thereof, are, or may be, placed
or assembled, and to remove any such Collateral;


 


(iii)                                         from time to
time, at the expense of Tenant, to make all such repairs, replacements,
alterations, additions and improvements to and of the Collateral as the Secured
Parties may reasonably deem proper; to carry on the business and to exercise
all rights and powers of Tenant in respect to the Collateral, as the Secured
Parties shall deem best, including the right to enter into any and all such
agreements with respect to the leasing, management and/or operation of the
Collateral or any part thereof as the Secured Parties may see fit; to collect
and receive all rents, issues, profits, fees, revenues and other income of the
same and every part thereof which rents, issues, profits, fees, revenues and
other income may be applied to pay the expenses of holding and operating the
Collateral and of conducting the business thereof, and of all maintenance,
repairs, replacements, alterations, additions and improvements, and to make all
payments which the Secured Parties may be required or may elect to make, if any,
for taxes, assessments, insurance 


 


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                                                          and other
charges upon the Collateral or any part thereof, and all other payments which
the Secured Parties may be required or authorized to make under any provision
of this Agreement (including, without limitation, reasonable legal costs and
attorneys’ fees);


 


(iv)                                        to execute any
instrument and do all other things necessary and proper to protect and preserve
and realize upon the Collateral and the other rights contemplated hereby;


 


(v)                                           upon notice to
such effect, to require Tenant to deliver, at Tenant’s expense, any or all
Collateral which is reasonably movable to the Secured Parties at a place
designated by the Secured Parties, and after delivery thereof Tenant shall have
no further claim to or interest in the Collateral; and


 


(vi)                                        without
obligation to resort to other security, at any time and from time to time, to
sell, re-sell, assign and deliver all or any of the Collateral, in one or more
parcels at the same or different times, and all right, title and interest,
claim and demand therein and right of redemption thereof, at public or private
sale, for cash, upon credit or for future delivery, and at such price or prices
and on such terms as the Secured Parties may determine, with the amounts
realized from any such sale to be applied to the Secured Obligations in the
manner determined by the Secured Parties.


 


Tenant hereby agrees that all of the foregoing may
be effected without demand, advertisement or notice (except as hereinafter
provided or as may be required by law), all of which (except as hereinafter
provided) are hereby expressly waived, to the maximum extent permitted by
law.  The Secured Parties shall not be
obligated to do any of the acts hereinabove authorized and in the event that
the Secured Parties elect to do any such act, the Secured Parties shall not be
responsible to Tenant.


 


(b)           Upon the occurrence and during the continuance of an Event
of Default, the Secured Parties may take legal proceedings for the appointment
of a receiver or receivers (to which the Secured Parties shall be entitled as a
matter of right) to take possession of the Collateral pending the sale 


 


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thereof
pursuant either to the powers of sale granted by this Agreement or to a
judgment, order or decree made in any judicial proceeding for the foreclosure
or involving the enforcement of this Agreement. 
If, after the exercise of any or all of such rights and remedies, any of
the Obligations shall remain unpaid or unsatisfied, Tenant shall remain liable
for any deficiency or performance thereof, as applicable.


 


(c)           Upon any sale of any of the Collateral, whether made under
the power of sale hereby given or under judgment, order or decree in any
judicial proceeding for the foreclosure or involving the enforcement of this
Agreement:


 


(i)                                               the Secured
Parties may bid for and purchase the property being sold and, upon compliance
with the terms of sale, may hold, retain and possess and dispose of such
property in its own absolute right without further accountability, and may, in
paying the purchase money therefor, deliver any instruments evidencing the
Obligations or agree to the satisfaction of all or a portion of the Obligations
in lieu of cash in payment of the amount which shall be payable thereon, and
such instruments, in case the amounts so payable thereon shall be less than the
amount due thereon, shall be returned to the Secured Parties after being
appropriately stamped to show partial payment;


 


(ii)                                            the Secured
Parties may make and deliver to the purchaser or purchasers a good and
sufficient deed, bill of sale and instrument of assignment and transfer of the
property sold;


 


(iii)                                         all right,
title, interest, claim and demand whatsoever, either at law or in equity
or  otherwise, of Tenant of, in and to
the property so sold shall be divested; such sale shall be a perpetual bar both
at law and in equity against Tenant, its successors and assigns, and against
any and all Persons claiming or who may claim the property sold or any part
thereof from, through or under Tenant, its successors or assigns;


 


(iv)                                        the receipt of
the Secured Parties or of the officers thereof making such sale shall be a
sufficient discharge to the purchaser or 


 


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                                                          purchasers at
such sale for his or their purchase money, and such purchaser or purchasers,
and his or their assigns or personal representatives, shall not, after paying
such purchase money and receiving such receipt of the Secured Parties or of
such officer therefor, be obliged to see to the application of such purchase
money or be in any way answerable for any loss, misapplication or
nonapplication thereof; and


 


(v)                                           to the extent
that it may lawfully do so, Tenant agrees that it will not at any time insist
upon, or plead, or in any manner whatsoever claim or take advantage of, any
appraisement, valuation, stay, extension or redemption laws, or any law
permitting it to direct the order in which the Collateral or any part thereof
shall be sold, now or at any time hereafter in force, which may delay, prevent
or otherwise affect the performance or enforcement of this Agreement or any
other document, the Amended Lease No. 3 or any other document or agreement
entered into in connection herewith or therewith, and Tenant hereby expressly
waives all benefit or advantage of any such laws and covenants that it will not
hinder, delay or impede the execution of any power granted or delegated to the
Secured Parties in this Agreement, but will suffer and permit the execution of
every such power as though no such laws were in force.


 


In the event of any sale of Collateral pursuant to
this Section 7, the Secured Parties shall, at least ten (10) days
before such sale, give Tenant written notice of their intention to sell, except
that, if the Secured Parties shall determine in their reasonable discretion
that any of the Collateral threatens to decline in value, any such sale may be
made upon three (3) days’ written notice to Tenant, which time periods
Tenant hereby agrees are reasonable.


 


(d)  The Secured Parties are
hereby irrevocably appointed the true and lawful attorney-in-fact of Tenant in
its name and stead, to make all necessary deeds, bills of sale and instruments
of assignment and transfer of the property sold pursuant to this Section 7
and for such other purposes as are necessary or desirable to effectuate the
provisions of this Agreement, and for that purpose it may execute and deliver
all 


 


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necessary
deeds, bills of sale and instruments of assignment and transfer, and may
substitute one or more Persons with like power, Tenant hereby ratifying and
confirming all that its said attorney, or such substitute or substitutes, shall
lawfully do by virtue hereof.  If so
requested by the Secured Parties or by any purchaser, Tenant shall ratify and
confirm any such sale or transfer by executing and delivering to the Secured
Parties or to such purchaser all property, deeds, bills of sale, instruments or
assignment and transfer and releases as may be designated in any such request.


 


Section 8.    Application of
Moneys.  All moneys
which the Secured Parties shall receive pursuant hereto shall first be applied
(to the extent thereof) to the payment of all reasonable costs and expenses
incurred in connection with the administration and enforcement of, or the
preservation of any rights under, this Agreement or the Amended Lease No. 3
(including, without limitation, the reasonable fees and disbursements of its
counsel and agents) and the balance, if any, shall be applied first to accrued
and unpaid interest, charges and fees on, and then to outstanding principal of,
any Obligations or any other obligations of Tenant (or its affiliates) to the Secured
Parties, and then to any other amounts outstanding on any such Obligations and
then as required by law to any other parties having an interest therein.


 


Section 9.    Waivers, Etc.  Tenant, on its own behalf and on behalf of
its successors and assigns, hereby waives presentment, demand, notice, protest
and, except as is otherwise specifically provided herein, all other demands and
notices in connection with this Agreement or the enforcement of the rights of
the Secured Parties hereunder or in connection with any Obligations or any
Collateral; waives all rights to require a marshaling of assets by the Secured
Parties; consents to and waives notice of (i) the substitution, release or
surrender of any Collateral, (ii) the addition or release of Persons primarily
or secondarily liable on any Obligation or on any Collateral, (iii) the
acceptance of partial payments on any Collateral and/or the settlement or
compromise thereof, (iv) any requirement of diligence or promptness on the
part of the Secured Parties in the enforcement of any rights in respect of any
Collateral or any other agreement or instrument directly or indirectly relating
thereto, and (v) any enforcement of any present or future agreement or
instrument relating directly or indirectly to the Collateral.  No delay or omission on the part of the
Secured Parties or any holder of Obligations in exercising any right hereunder
shall operate as a waiver of such right or of any other right hereunder.  No waiver of any such right on any 


 


15

















 


one occasion shall be
construed as a bar to or waiver of any such right on any future occasion.  No course of dealing between Tenant and the
Secured Parties or any holder of Obligations, nor any failure to exercise, nor
any delay in exercising, on the part of the Secured Parties or any holder of
Obligations, any right, power or privilege hereunder or under any of the
Obligations, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof, or the exercise of any other right, power or
privilege.


 


Tenant further waives any right it may have under
the constitution of any state or commonwealth in which any of the Collateral
may be located, or under the Constitution of the United States of America, to
notice (except for notice specifically required hereby) or to a judicial
hearing prior to the exercise of any right or remedy provided by this Agreement
to the Secured Parties, and waives its rights, if any, to set aside or
invalidate any sale duly consummated in accordance with the foregoing  provisions hereof on the grounds (if such be
the case) that the sale was consummated without a prior judicial hearing.  TENANT’S WAIVERS UNDER THIS SECTION 9
HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY AND AFTER TENANT HAS
BEEN APPRISED AND COUNSELED BY ITS ATTORNEYS AS TO THE NATURE THEREOF AND ITS
POSSIBLE ALTERNATIVE RIGHTS.


 


The Secured Parties shall not be required to marshal
any present or future security for (including without limitation this Agreement
and the Collateral pledged hereunder), or guaranties of, the Obligations or any
of them, or to resort to such security or guaranties in any particular order; and
all of the rights hereunder and in respect of such securities and guaranties
shall be cumulative and in addition to all other rights, however existing or
arising.  To the maximum extent permitted
by applicable law, Tenant hereby agrees that it will not invoke any law
relating to the marshalling of collateral, which might cause delay in or impede
the enforcement of the Secured Parties’ rights under this Agreement or under
any other instrument evidencing any of the Obligations or under which any of
the Obligations is outstanding or by which any of the Obligations is secured or
guaranteed, and, to the maximum extent permitted by applicable law, Tenant
hereby irrevocably waives the benefits of all such laws.


 


Section 10.    Further Assurances
as to Collateral; Attorney-in-Fact.  From time to time hereafter, Tenant will
execute and deliver, or will cause to be executed and delivered, such
additional instruments, certificates or documents (including, 


 


16

















 


without limitation,
financing statements, renewal statements, mortgages, collateral assignments and
other security documents), and will take all such actions as the Secured
Parties may reasonably request, for the purposes of implementing or
effectuating the provisions of this Agreement or of more fully perfecting or
renewing the Secured Parties’ rights with respect to the Collateral (or with
respect to any additions thereto or replacements or proceeds thereof or with
respect to any other property or assets hereafter acquired by Tenant which may
be deemed to be a part of the Collateral) pursuant hereto and thereto.  The Secured Parties are hereby appointed the
attorney-in-fact, with full power of substitution, of Tenant for the purpose of
carrying out the provisions of this Agreement and taking any action, including,
without limitation, executing, delivering and filing applications,
certificates, instruments and other documents and papers with governmental
authorities, and executing any instruments, including without limitation
financing or continuation statements, deeds to secure debt, mortgages,
assignments, conveyances, assignments and transfers which are required to be
taken or executed by Tenant under this Agreement, on its behalf and in its name
which appointment is coupled with an interest, is irrevocable and durable and
shall survive the subsequent dissolution, disability or incapacity of Tenant.


 


Section 11.    Arbitration.  The Secured Parties or Tenant may elect to
submit any dispute hereunder that has an amount in controversy in excess of
$250,000 to arbitration hereunder.  Any
such dispute shall be resolved in accordance with the Commercial Arbitration Rules of
the American Association then pertaining and the decision of the arbitrators
with respect to such dispute shall be binding, final and conclusive on the
parties.


 


In the event the Secured Parties or Tenant shall
elect to submit any such dispute to arbitration hereunder, the Secured Parties
and Tenant shall each appoint and pay all fees of a fit and impartial person as
arbitrator with at least ten (10) years’ recent professional experience in
the general subject matter of the dispute. 
Notice of such appointment shall be sent in writing by each party to the
other, and the arbitrators so appointed, in the event of their failure to agree
within thirty (30) days after the appointment of the second arbitrator upon the
matter so submitted, shall appoint a third arbitrator.  If either the Secured Parties or Tenant shall
fail to appoint an arbitrator, as aforesaid, for a period of twenty (20) days
after written notice from the other party to make such appointment, then the
arbitrator appointed by the party having made such appointment shall appoint a
second arbitrator and the two (2) so 


 


17

















 


appointed shall, in the
event of their failure to agree upon any decision within thirty (30) days
thereafter, appoint a third arbitrator. 
If such arbitrators fail to agree upon a third arbitrator within forty
five (45) days after the appointment of the second arbitrator, then such third
arbitrator shall be appointed by the American Arbitration Association from its
qualified panel of arbitrators, and shall be a person having at least ten (10) years’
recent professional experience as to the subject matter in question.  The fees of the third arbitrator and the
expenses incident to the proceedings shall be borne equally between the Secured
Parties and Tenant, unless the arbitrators decide otherwise.  The fees of respective counsel engaged by the
parties, and the fees of expert witnesses and other witnesses called for the
parties, shall be paid by the respective party engaging such counsel or calling
or engaging such witnesses.


 


The decision of the arbitrators shall be rendered
within thirty (30) days after appointment of the third arbitrator.  Such decision shall be in writing and in
duplicate, one counterpart thereof to be delivered to the Secured Parties and
one to Tenant.  A judgment of a court of
competent jurisdiction may be entered upon the award of the arbitrators in
accordance with the rules and statutes applicable thereto then obtaining.


 


Section 12.    Appointment
of Agent for Secured Parties.  Each of the
Secured Parties hereby appoints SPTMNR Properties Trust as its agent for the
following purposes under this Agreement (including, without limitation, the
full power and authority to act on the Secured Parties’ behalf for such
purposes): (i) to give or receive notices, demands, claims and other
communications on behalf of the Secured Parties under this Agreement and (ii) to
receive and hold any and all Collateral which is to be delivered from time to
time by Tenant to the Secured Parties in accordance with the terms and
conditions of this Agreement.


 


Section 13.    Miscellaneous.


 


(a)           Tenant agrees that its obligations and the rights of the
Secured Parties hereunder and in respect of the Obligations may be enforced by
specific performance hereof and thereof and by temporary, preliminary and/or
final injunctive relief relating hereto and thereto, without necessity for
proof by the Secured Parties or any holder of the Obligations that it would
otherwise suffer irreparable harm, and Tenant hereby consents to the issuance
of such specific and injunctive relief.


 


18

















 


(b)           Any notice or demand upon Tenant or the Secured Parties
shall be deemed to have been sufficiently given when given in accordance with
the provisions of the Amended Lease No. 3.


 


(c)           None of the terms and conditions of this Agreement may be
changed, waived, modified or varied in any manner whatsoever unless in writing
duly signed by Tenant and the Secured 
Parties.  No notice to or demand
on Tenant in any case shall entitle Tenant to any other or further notice or
demand in similar or other circumstances or constitute a waiver of any of the
rights of the Secured Parties to any other or further action in any
circumstances without notice or demand.


 


(d)           The obligations of Tenant hereunder shall remain in full
force and effect without regard to, and shall not be impaired by, (i) any
bankruptcy, insolvency, reorganization, arrangement, readjustment, composition,
liquidation or the like of Tenant; (ii) any exercise or non-exercise, or
any waiver of, any right, remedy, power or privilege under or in respect of
this Agreement, the Amended Lease No. 3 or any document or agreement
executed in connection herewith or therewith, the Obligations or any security
for any of the Obligations; or (iii) any amendment to or modification of
any of the Amended Lease No. 3 or any document or agreement executed in
connection herewith or therewith, the Obligations or any security for any of
the Obligations; whether or not Tenant shall have notice or knowledge of any of
the foregoing.  The rights and remedies
of the Secured Parties herein provided for are cumulative and not exclusive of
any rights or remedies which the Secured Parties would otherwise have,
including, without limitation, under the Amended Lease No. 3 or any
document or agreement executed in connection herewith or therewith.  This Agreement is intended as a supplement
for and is not intended to supersede in any respect the Amended Lease No. 3
or any document or agreement executed in connection herewith or therewith.


 


(e)           This Agreement shall be binding upon Tenant and its
successors and assigns and shall inure to the benefit of the Secured Parties,
and its respective successors and assigns. 
All agreements, representations and warranties made herein shall survive
the execution and delivery of this Agreement.


 


(f)            The descriptive headings of the several sections of this
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.


 


19
















 


(g)           Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibitions or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.


 


(h)           This Agreement shall be interpreted,
construed, applied and enforced in accordance with the laws of the Commonwealth
of Massachusetts applicable to contracts between residents of Massachusetts
which are to be performed entirely within Massachusetts, regardless of (i) where
this Agreement is executed or delivered; or (ii) where any payment or
other performance required by this Agreement is made or required to be made; or
(iii) where any breach of any provision of this Agreement occurs, or any
cause of action otherwise accrues; or (iv) where any action or other
proceeding is instituted or pending; or (v) the nationality, citizenship,
domicile, principle place of business, or jurisdiction of organization or
domestication of any party; or (vi) whether the laws of the forum
jurisdiction otherwise would apply the laws of a jurisdiction other than the
Commonwealth of Massachusetts; or (vii) any combination of the
foregoing.  Notwithstanding the
foregoing, to the extent that matters of title, or creation, perfection and
priority of the security interests created hereby, or procedural issues of
foreclosures are required to be governed by the laws of the state in which the
Collateral, or relevant part thereof, is located, the laws of such State shall
apply.


 


Section 14.    Nonliability
of Trustees.   THE DECLARATIONS OF TRUST
ESTABLISHING CERTAIN ENTITIES COMPRISING THE SECURED PARTIES, COPIES OF WHICH,
TOGETHER WITH ALL AMENDMENTS THERETO (COLLECTIVELY, THE “DECLARATIONS”), ARE
DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF
MARYLAND, PROVIDE THAT THE NAMES OF SUCH ENTITIES REFER TO THE TRUSTEES UNDER
SUCH DECLARATIONS COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY,
AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SUCH ENTITIES
SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY
OBLIGATION OF, OR CLAIM AGAINST, SUCH ENTITIES. 
ALL PERSONS DEALING WITH SUCH ENTITIES, IN ANY WAY, SHALL LOOK ONLY TO
THE ASSETS OF SUCH ENTITIES FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF
ANY OBLIGATION.


 


Section 15.    Original Security Agreements.   The
Secured Parties and Tenant acknowledge and agree that this Agreement 


 


20

















 


amends and restates the
Original Security Agreements in their entirety with respect to the Collateral
and that this Agreement shall govern the rights and obligations of the Secured
Parties and Tenant with respect to the Collateral from and after the date of
this Agreement.  Notwithstanding the
foregoing, the Original Security Agreements shall continue to govern the rights
and obligations of the Secured Parties and Tenant with respect to the
Collateral prior to the date of this Agreement.


 


[Remainder
of page intentionally left blank.]


 


21

















 


IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed under seal as of the date first above written.


 


	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  FIVE STAR QUALITY CARE TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Travis K. Smith

  
	
   

  	
   

  	
  Travis K. Smith

  
	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Corporate Organizational Number:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SECURED PARTIES:

  
	
   

  	
   

  
	
   

  	
  SNH SOMERFORD PROPERTIES TRUST, 

  SPTIHS PROPERTIES TRUST, and 

  SPTMNR PROPERTIES TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Richard A. Doyle

  
	
   

  	
  Richard A. Doyle

  
	
   

  	
  Treasurer and Chief Financial 

  Officer of each of the foregoing entities

  



 

















 


SCHEDULE 1


 


CHIEF EXECUTIVE OFFICE:


 


	
   

  	
  400 Centre Street

  
	
   

  	
  Newton, Massachusetts 02458

  



 


PRINCIPAL PLACE OF BUSINESS:


 


	
   

  	
  400 Centre Street

  
	
   

  	
  Newton, Massachusetts 02458

  



 

















 


SCHEDULE 2


 


THE FACILITIES


 


CALIFORNIA:


 


	
  LA SALETTE HEALTH AND REHABILITATION CENTER

  	
   

  
	
   

  	
  537 E. Fulton Street

  
	
   

  	
  Stockton, California 95204

  
	
   

  	
   

  
	
  SOMERFORD PLACE – ENCINITAS

  	
   

  
	
   

  	
  1350 S. El Camino Real

  
	
   

  	
  Encinitas, California 92024

  
	
   

  	
   

  
	
  SOMERFORD PLACE – FRESNO

  	
   

  
	
   

  	
  6075 N. Marks Avenue

  
	
   

  	
  Fresno, California 93711

  
	
   

  	
   

  
	
  SOMERFORD PLACE – REDLANDS

  	
   

  
	
   

  	
  1319 Brookside Avenue

  
	
   

  	
  Redlands, California 92373

  
	
   

  	
   

  
	
  SOMERFORD PLACE – ROSEVILLE

  	
   

  
	
   

  	
  110 Sterling Court

  
	
   

  	
  Roseville, California 95661

  
	
   

  	
   

  
	
  SOMERFORD PLACE – STOCKTON

  	
   

  
	
   

  	
  3530 Deer
  Park Drive

  
	
   

  	
  Stockton,
  California 95219

  
	
   

  	
   

  
	
  THOUSAND OAKS HEALTH CARE CENTER

  	
   

  
	
   

  	
  93 W. Avenida de Los Arboles

  
	
   

  	
  Thousand Oaks, California 91360

  
	
   

  	
   

  
	
  COLORADO:

  
	
   

  
	
  CEDARS HEALTHCARE CENTER

  	
   

  
	
   

  	
  1599 Ingals Street

  
	
   

  	
  Lakewood, Colorado 80214

  
	
   

  	
   

  
	
  SPRINGS VILLAGE CARE CENTER

  	
   

  
	
   

  	
  110 West Van Buren

  
	
   

  	
  Colorado Springs, Colorado 80907

  
			



 

















 


	
  WILLOW TREE CARE CENTER

  	
   

  
	
   

  	
  2050 South Main

  
	
   

  	
  Delta, Colorado 81416

  
	
   

  	
   

  
	
  DELAWARE: 

  
	
   

  
	
  SOMERFORD HOUSE – NEWARK

  	
   

  
	
   

  	
  501 S.
  Harmony Road

  
	
   

  	
  Newark, Delaware 19713

  
	
   

  	
   

  
	
  SOMERFORD PLACE – NEWARK

  	
   

  
	
   

  	
  4175 Ogletown Road

  
	
   

  	
  Newark, Delaware 19713

  
	
   

  
	
  GEORGIA:

  
	
   

  
	
  AUTUMN BREEZE HEALTHCARE CENTER

  	
   

  
	
   

  	
  1480 Sandtown Road

  
	
   

  	
  Marietta, Georgia 30060

  
	
   

  	
   

  
	
  SOUTHLAND CARE CENTER

  	
   

  
	
   

  	
  606 Simmons Street

  
	
   

  	
  Dublin, Georgia 31021

  
	
   

  
	
  IOWA:

  
	
   

  
	
  NORTHCREST CARE & REHABILITATION

  	
   

  
	
   

  	
  34 Northcrest Drive

  
	
   

  	
  Council Bluffs, Iowa 51503

  
	
   

  	
   

  
	
  PACIFIC PLACE

  	
   

  
	
   

  	
  20937 State Highway 385

  
	
   

  	
  Pacific Junction, Iowa 51561

  
	
   

  
	
  WEST BRIDGE CARE & REHABILITATION

  	
   

  
	
   

  	
  1015 West Summit

  
	
   

  	
  Winterset, Iowa 50273

  
	
   

  	
   

  
	
  KANSAS:

  
	
   

  	
   

  
	
  WOODHAVEN CARE CENTER

  	
   

  
	
   

  	
  510 W 7th Street

  
	
   

  	
  Ellinwood, Kansas 67526

  
			



 

















 


	
  MARYLAND:

  	
   

  
	
   

  	
   

  
	
  SOMERFORD
  PLACE – ANNAPOLIS

  
	
   

  	
  2717 Riva Road

  
	
   

  	
  Annapolis, Maryland 21401

  
	
   

  	
   

  
	
  SOMERFORD PLACE – COLUMBIA

  
	
   

  	
  8220 Snowden River Parkway

  
	
   

  	
  Columbia, Maryland 21045

  
	
   

  	
   

  
	
  SOMERFORD PLACE AND SOMERFORD HOUSE –
  FREDERICK

  
	
   

  	
  2100 Whittier Drive

  
	
   

  	
  Frederick, Maryland 21702

  
	
   

  	
   

  
	
  SOMERFORD PLACE AND SOMERFORD HOUSE –
  HAGERSTOWN

  
	
   

  	
  10114 & 10116 Sharpsburg Pike

  
	
   

  	
  Hagerstown, Maryland 21740

  
	
   

  	
   

  
	
  MISSOURI:

  	
   

  
	
   

  	
   

  
	
  NORTHVIEW
  MANOR

  
	
   

  	
  300 Cedar Street

  
	
   

  	
  Tarkio, Missouri 64491

  
	
   

  	
   

  
	
  NEBRASKA:

  	
   

  
	
   

  	
   

  
	
  AINSWORTH CARE CENTER

  
	
   

  	
  143 North Fullerton

  
	
   

  	
  Ainsworth, Nebraska 69210

  
	
   

  	
   

  
	
  CRESTVIEW
  HEALTHCARE CENTER

  
	
   

  	
  1100 West First Street

  
	
   

  	
  Milford, Nebraska 68405

  
	
   

  	
   

  
	
  EXETER CARE CENTER

  
	
   

  	
  425 South Empire Avenue

  
	
   

  	
  Exeter, Nebraska 68351

  
	
   

  	
   

  
	
  LOGAN VALLEY MANOR

  
	
   

  	
  1035 Diamond
  Street

  
	
   

  	
  Lyons,
  Nebraska 68038

  
	
   

  	
   

  
	
  MORYS HAVEN

  
	
   

  	
  1112 15th Street

  
	
   

  	
  Columbus, Nebraska 68601

  
			



 

















 


	
  UTICA
  COMMUNITY CARE CENTER

  
	
   

  	
  1350 Centennial Avenue

  
	
   

  	
  Utica, Nebraska 68456

  
	
   

  	
   

  
	
  WEDGEWOOD CARE CENTER

  
	
   

  	
  800 Stoeger Drive

  
	
  

  	
  Grand Island, Nebraska 68803

  
	
   

  	
   

  
	
  WISCONSIN:

  	
   

  
	
   

  	
   

  
	
  GREENTREE HEALTH & REHABILITATION
  CENTER

  
	
   

  	
  70 Greentree Road

  
	
   

  	
  Clintonville, Wisconsin 54929

  
	
   

  	
   

  
	
  PINE MANOR HEALTHCARE CENTER

  
	
   

  	
  Route 4, Box 549

  
	
   

  	
  Clintonville, Wisconsin 54929

  
	
   

  	
   

  
	
  THE VIRGINIA HEALTH &
  REHABILITATION CENTER

  
	
   

  	
  1451 Cleveland Avenue

  
	
   

  	
  Waukesha, Wisconsin 53186

  
	
   

  	
   

  
	
  WYOMING:

  	
   

  
	
   

  	
   

  
	
  WORLAND HEALTHCARE & REHABILITATION
  CENTER

  
	
   

  	
  1901 Howell Avenue

  
	
   

  	
  Worland, Wyoming 82401